Cloud phone systems are growing in popularity, and it’s not hard to see why. A cloud phone system offers the same functionality as traditional phones and so much more. Cloud technology lets you use your business phone number from anywhere and integrates with your existing business software, to name a couple of examples.
We break down how cloud phone systems work, why they’re different from regular phones and who they’re best for.
What is a Cloud-Based Phone System?
A cloud-based phone system is a phone system that uses the internet to make calls. Instead of being configured and hosted through traditional private branch exchange (PBX) hardware, a cloud-based phone system is hosted on a provider’s server network.
How it Works
When you place a call through a cloud-based phone system, your voice gets translated into a digital signal that gets transported over the internet. This signal is converted back into a phone signal before it reaches its destination.
Since the PBX system is hosted through the cloud, cloud-based phone systems don’t require nearly as much hardware as a traditional phone system. They also allow you to make or take calls from anywhere since you can access them remotely from any internet-enabled device.
Cloud Phone, VoIP and Traditional Phone Explained
The term “cloud phone” and “VoIP” are often used synonymously, but they are slightly different. All cloud-based phone systems are also VoIP systems, but not all VoIP systems are cloud-based.
VoIP stands for voice-over-internet-protocol and has been around well before cloud-based systems became mainstream. The first VoIP systems were custom configured and installed over company servers, and therefore were not stored in the cloud. However, this was cumbersome to set up and maintain, so over time, cloud-based VoIP became the norm. Cloud-based VoIP systems are hosted over the VoIP provider’s servers, which handle call routing and signal processing on your behalf, thus alleviating your in-house IT team.
A traditional business phone system uses an on-site PBX to route calls to the appropriate number or extension. Your business is generally responsible for the PBX’s physical upkeep. Calls are transmitted through on-site networks of copper wires and switches, rather than the internet.
When to Use a Cloud Phone System
There are many advantages to using a cloud phone system over a traditional system. If you or your employees need to be able to make business calls remotely, or if you’re looking to grow your operations in a short span of time, a cloud-based phone system might be more suitable.
Plus, cloud phones come with tons of useful features and integrations. If you want to offer a more seamless experience to both your customers and employees, a cloud phone system can help you do so.
Features and Integrations
Most cloud-based phone systems come with a variety of useful features for your business. Some of the most common ones include:
- Call forwarding: Forwards calls to a different device or number that your support agent uses.
- Call holding and transferring: Agents can put customers on hold or transfer them to a different department or representative for assistance.
- Call monitoring and recording: Your team can listen in on phone calls between other employees and customers and record them for future reference.
- Call presence: Lets agents mark if they are busy or available so they can be contacted at appropriate times.
- Call routing: Customize how you want incoming calls to be fielded to your team. You can choose between having the first available agent answer, having the most qualified agent answer or answering in order of customer status (for example, letting VIPs through first).
- Caller ID and blocking: See who’s calling you, as well as ensure that your business’s name appears whenever you call. Block any unwanted calls or prevent spam numbers from getting through.
- Local and toll-free vanity numbers: Get a phone number with a local area code or an easy-to-remember vanity number (like 1-800-FLOWERS).
- Unified communications as a service (UCaaS): Gives your business a unified dashboard or interface for phone calls, SMS texting, live chatting, screen sharing and more.
- Video conferencing: Allows your team to have virtual video meetings, which is ideal for remote or blended in-person/remote teams.
Likewise, cloud-based phone systems can integrate with common tools your business may already be using, such as:
- Google Workspace (Google Docs, Google Sheets, Google Slides)
- Microsoft 365
- Salesforce and other CRM software
- Amazon Alexa
Pros and Cons
Like any phone system, there are pros and cons to getting a cloud-based phone system for your business. The pros include:
- They can save you money. Businesses switch to cloud-based systems because they’re often less expensive than traditional phone systems.
- They can be used from anywhere. Since cloud-based phones use the internet, your business can take or make calls from anywhere that has an internet connection. This means they’re a lot more remote-work friendly than traditional phones, which require you to be in a specific location.
- They can be more reliable. Cloud-based phones are hosted through data networks that rely on multiple servers in different locations. If one server goes down, your service can be transferred to a different server, leaving your business uninterrupted.
- They’re more scalable. Since they’re software-based, you can easily add more lines when you expand your business. With a traditional phone service, adding new lines can be more expensive and cumbersome.
- They’re more low maintenance. Cloud-based phones can be updated to reflect the latest technology relatively quickly, whereas traditional phones can’t.
- You can integrate them into other tools your business uses. For example, you may be able to integrate cloud-based phones with your CRM so that your business can keep track of every call.
However, the drawbacks of using a cloud-based phone system are:
- They require a stable internet connection. If your internet connection is spotty or unreliable, you won’t be able to use a cloud-based phone system.
- Your calls might not sound as clear or they may lag. Another drawback of having a phone system that uses the internet is that your calls might lag or sound fuzzier than those made on a traditional phone.
- You might need to invest in different equipment if you decide to switch. Cloud-based phone systems need cloud-enabled phones. If you don’t already have those, you’ll need to purchase some, which could be costly. Be sure to weigh the costs of getting new hardware and a new system against sticking with your current system.
How to Get a Cloud Phone System
There are many different cloud phone system providers to choose from. If you don’t already have a business phone system, you can sign up with the cloud phone provider of your choice and they can help you get started.
If you already have a phone system with a different provider and want to switch to a cloud-based solution, you’ll need to purchase a new phone plan and port your old number(s) if you wish to keep them. You also might need to buy new equipment if your current equipment isn’t cloud compatible.
Cloud Phone System Costs and Requirements
Cloud phone systems vary in cost depending on how big your team is, what kinds of features you need and if you pay annually or monthly. On the low end, VoIP phone systems cost about $12 per month per user and $80 per month per user on the high side. Prices are lower per user if you pay annually instead of monthly. You also might be able to lock in a lower rate than those publicly listed if you sign a contract that’s longer than one year.
You also may have to pay a one-time activation fee to get started when you switch. This is usually no more than $50. Some providers give access to their softphone app for free, while others charge up to $50 per month. And don’t forget to purchase compatible hardware, which will vary in cost depending on the provider’s requirements.
Cloud phone systems require a reliable internet connection to work properly. With an internet plan and computers in place, your team can use cloud-based softphone apps with no issue. If you want to use hardphones, you’ll need to get VoIP-compatible phones, which run anywhere from $60-$200 each, or headset adapters, which can cost anywhere from $30-$120 each.
Frequently Asked Questions
Why should I choose a cloud-based phone system for my business?
Every business has different needs. That being said, if you offer remote work or want a relatively low-maintenance system that keeps up with the latest technological advancements, a cloud-based phone system might be a good investment.
Can I use my same business phone number with a cloud-based phone system?
Yes. You can port your current number to a cloud-based service.
What’s a PBX?
PBX stands for private branch exchange, which is the hardware that routes inbound and outbound calls on an in-office phone system.
What’s the difference between an on-site PBX and a cloud-based PBX?
Traditionally, PBX systems were installed in person and on-site at an office, and stored in a closet or designated room. A cloud-based PBX means that this technology is stored in the cloud, thereby freeing physical space and offering more flexibility and customization.